December 26, 2013

Depending upon your assets, intended beneficiaries, or your own situation, a trust might be a better option to accomplish your preferred distribution scheme than a will. A trust is a document with three major players: the person who creates it (you), the trustee (who could be you and/or others) and the beneficiaries (who could be you and/or others). It provides an instruction manual as to how you want your assets (and debt) addressed. It is especially useful if there are minor beneficiaries and you want to know that instructions are followed long-term, or where another needs some long-term financial assistance or management (such as a special or supplementary needs trust.)

Beneficiary Designations:

Confirm that beneficiary designations on your various accounts remain current and in line with your overall estate plan. Types of assets that frequently carry opportunities for beneficiary designations include: insurance, annuity, and retirement accounts, and/or some brokerage accounts (accounts that hold securities and other investments). The benefits to such designations are to completely avoid probate, and there may be some income tax advantages to naming a beneficiary directly, rather than your estate or trust. Keep in mind that the individuals or entities named on the beneficiary designation are the recipients where the assets will be paid. If your estate plan is premised on having assets go through your probate estate, and therefore directed to be distributed through your will, but the beneficiary designation is not changed to be consistent with that approach, your plan will be defeated.

If you are divorced and intend for your ex-spouse to receive assets via a beneficiary designation that has not been changed since the divorce, revisit the designation. Under the MUPC, divorce effectively revokes certain beneficiary designations to a prior spouse. You may need to take affirmative steps to insure that the designation will be upheld by renewing it post-divorce.